While they might have reigned supreme for a while in the US, the law is finally catching up to online casino-style platforms that have been operating in illegal manners. Not all of them have been straight-up villains; some have simply existed in a grey area not yet covered by laws. Either way, lawmakers across North America have been cracking down on tightening iGaming regulations and, with it, cutting off online websites that don’t fit those standards.
Going back to Cali
The latest lawsuit has been filed in California by Dennis Boyle, who claims that Stake.us is operating as an illegal casino in the state. While Stake.us doesn’t facilitate real-money gaming in the same way that a licensed online casino would, instead, it operates as a sweepstakes casino (a lawsuit has since been filed in Illinois, too).
On Stake.us, players use Gold Coins to play games with. These have no monetary value and cannot be redeemed in any way; consider these closer to chocolate coins than actual sterling. However, players can obtain Stake Cash through promotional offers and this currency can be redeemed for crypto. So the question that’s been floating around the US for several years has been: Is this gambling or not? Sure, you can’t buy Stake Cash, so you’re not risking any of your own money on games of chance. However, sweepstakes casinos will very often give this proprietary currency away when you purchase more Gold Coins from the shop, so does that proxy still count? Lawmakers are still figuring it out. Speaking of which, this is exactly what lawmakers in California are trying to figure out now that Boyle has initiated the lawsuit against Stake.us.
If the court favours Boyle, Stake.us could be forced to leave California. The state does not currently allow real-money online casinos, so there is no way that Stake.us could even file for a licence to operate. This is hardly an isolated incident, either.
East Coast, West Coast
A few weeks ago, Stake.us announced that it was pulling out of New Jersey, Delaware, West Virginia, Pennsylvania and Rhode Island. As of 21 March, player accounts were placed in ‘Redeem Only’ mode and no longer function as they previously did. Customers in those states can no longer play games or make any purchases; for the moment, they can redeem any Stake Cash remaining in their balance. On its website, Stake also explains that it no longer operates in Kentucky, Idaho, Michigan, Vermont, Nevada, New York or Washington. While many players took to places like Reddit to complain, as many of them enjoyed being able to gamble anonymously through crypto channels, several were quick to point out that Stake.us allowed excluded players onto the platform.
As it’s not a regulated site, Stake.us was still accessible to players who had self-excluded from gambling sites, and many users also reported that little action was taken when they reached out to the platform for help. It’s probably no coincidence, then, that New Jersey, Delaware, West Virginia, Pennsylvania, Michigan, Connecticut and Rhode Island are all of the US states with regulated online gambling laws, and therefore established gambling commissions with the means to take down websites they find unsuitable for players in their jurisdictions.
High 5 Games also made a similar move earlier this year, when in February, it quietly changed its terms and conditions to include a new roster of excluded territories. These were, you guessed it: Connecticut, Delaware, New Jersey, Pennsylvania, Rhode Island and West Virginia. As for the wider US market as a whole, the Social Sweepstakes Gaming Alliance (SPGA) and the American Gaming Association (AGA) are currently battling it out to try and establish whether these online sweepstakes websites are legal, once and for all.
Can it all be so simple?
Sweepstakes casinos aren’t the only platforms in grey areas, either. The lucrative world of ‘events contracts’ has also caught the eyes of several gambling control boards, and they aren’t happy about them. The event contracts business model is simple: The site offers ‘event contracts’, which allow players to place money on one of two outcomes and ultimately win or lose money based on the outcome of that game. As Matt Schuler, Ohio Casino Control Commission Executive Director, puts it, “plainly stated, [that] is operating online sports gaming.”
At the start of April, the OCCC issued a cease-and-desist letter to Kalshi, Robinhood and Crypto.com following an investigation into their business practices. This follows similar steps taken by Nevada and New Jersey, with both states also in the process of shutting down Kalshi’s operations in their jurisdictions. The Kalshi CEO wasn’t happy, though, and took to Twitter (X) to share his plans on how he was going to retaliate by suing through the federal courts. However, Tarek Mansour does seem to be a man with a lot of plans, as the other recent ones from his feed include launching his own news media organisation and promoting betting markets on the Trump Administration’s appointments and policy changes… while having Donald Trump Jr as the company’s Strategic Advisor.
Creating laws and regulations, especially for ones as complicated as gambling and sports betting, are always going to take several years and revisions to get right. During this time, customers are going to play at whichever online casino suits their needs, even if it means playing at somewhere unlicensed. Now that several states are growing more confident in what they will and won’t allow, we can probably expect the scene to shift towards a more ‘traditional’ online casino ecosystem. Online sweepstakes casinos and events wagering were never going to go away overnight, but these latest lawsuits certainly feel like there is enough opposition from the other side.
